Public benevolent institution salary sacrifice and the minimum wage

Public benevolent institution salary sacrifice and the minimum wage

If you work for a public benevolent institution (PBI) and use salary sacrifice arrangements, you still have the same legal protections as any other employee. The national minimum wage and modern awards set the lowest amount your employer can pay you in cash (or a combination of cash and allowable non-cash benefits). Salary sacrifice is a tax-effective way to reduce your taxable income, but it does not allow your employer to pay you less than the legal floor.

The legal minimum: national minimum wage and awards

From 1 July 2026, the adult national minimum wage is $26.44 per hour or $1,004.90 per week for a 38-hour ordinary week. Casual employees receive a loading of 25%, giving a casual minimum of $33.05 per hour. These rates apply to national-system employees who are award-free and agreement-free. Most private-sector employees, including those at many PBIs, are in the national system.

However, many PBI employees are covered by a modern award. The most common is the Social, Community, Home Care and Disability Services Industry Award (SCHADS Award). Award rates are generally higher than the national minimum. For example, the lowest ongoing classification under the SCHADS Award cannot fall below the national minimum, but introductory rates (first six months) are $25.74 per hour or $978.10 per week from 1 July 2026. If your award sets a higher rate, that rate is your minimum.

Enterprise agreements can also set higher rates. The Fair Work Commission sets the national minimum wage; the Fair Work Ombudsman explains and enforces it. Always check your specific award or agreement. See our Rate tables for award classification examples.

Salary sacrifice and the pay floor

Salary sacrifice is an arrangement where you agree to forgo part of your cash salary in exchange for non-cash benefits (e.g., a car, laptop, or additional super contributions). For PBI employees, salary sacrifice often provides fringe benefits tax (FBT) exemptions or concessions. But the key point is: the cash component of your pay after salary sacrifice must still meet the minimum wage. You cannot sacrifice your way below the legal floor.

For example, if your award rate is $30 per hour, you cannot sacrifice so much that your cash pay drops to $26.44. The employer must pay at least the award rate in money or a combination of money and benefits that count as wages under the Fair Work Act. The Fair Work Ombudsman has guidance on what counts as wages.

Super guarantee on top

Super guarantee is an employer payment on top of your ordinary time earnings. From 1 July 2026, the rate is 12%. This applies to your ordinary time earnings, which include salary-sacrificed amounts (unless the sacrifice is specifically for super). So even if you salary-sacrifice part of your pay, your employer must still pay super on the full amount before the sacrifice. Super is not deducted from your pay; it is an additional cost to the employer.

Award-free employees and junior rates

If you are award-free and not covered by an agreement, the national minimum wage applies. But not every worker must receive $26.44 per hour. Juniors, apprentices, trainees, and supported wage employees can be paid less. For award-free juniors, the percentages are: under 16 – 36.8% ($9.73/h), 16 – 47.3% ($12.51/h), 17 – 57.8% ($15.29/h), 18 – 68.3% ($18.06/h), 19 – 82.5% ($21.82/h), 20 – 97.7% ($25.84/h), 21 and over – 100% ($26.44/h). Casual loadings apply on top. Apprentice and trainee rates for award-free employees follow the Miscellaneous Award, not the junior percentages.

Separating the legal minimum from other figures

It is important to distinguish the legal minimum from survey averages or negotiated salaries. The ABS May 2026 survey reports full-time adult ordinary-time earnings of $2,083.70 per week and all employees average total earnings of $1,579.20 per week. These are averages, not minimums. Your salary sacrifice arrangement might be based on a higher negotiated salary, but the legal floor remains the national minimum or award rate. The reference on this site does not provide a precise market rate for PBI salary sacrifice; the legal floor is the starting point.

Conclusion

Public benevolent institution salary sacrifice can be a valuable tax tool, but it does not override wage laws. Your employer must pay at least the applicable minimum wage (national or award) in cash or allowable benefits, and super on top. Always check your award coverage and any enterprise agreement. For more information, see our How the figures work page or Topics on award coverage.